WM Market Reports
Chinese Private Banks Trumpet Home Market Advantage - Report

A report quotes domestic China and Hong Kong wealth managers saying they are well placed to tap new clients when compared with international firms, although the advantages are by no means all on their side.
Chinese banks have more options for bringing in people who can
serve the region’s surging number of high net worth and
ultra-high net worth clients, and have an edge over international
players trying to grab chunks of the market, a report said.
However, they need help in growing offshore investments, it
continued.
A report by Bloomberg claims that domestic Chinese banks
don’t face such a challenge as with firms such as UBS and Credit Suisse in
gaining wealthy clients because they already have a large,
established home market. However, such Chinese firms do need the
ability to grow offshore investments, the newswire quoted people
as saying.
“We don’t need people to hunt for customers. We already have a
lot of customers,” Joseph Tam, head of private banking at
Industrial
Bank Co in Hong Kong, was quoted saying. “Foreign banks
are expanding their assets under management through hiring as
they don’t really have the client pool.”
“Chinese banks can find private bankers through more channels,”
Kenny Lam, group president of Noah Holdings, an
asset manager for UHNW clients was quoted saying. “Most Chinese
banks are servicing emerging high-net-worth individuals. They
probably wouldn’t need someone from a company like UBS,” he
said.
International banks such as UBS are hungrily targeting the
Chinese market for UHNW individuals, and those among the Asian
region as a whole. The competition to win this market is bound to
remain fierce, with cultural awareness and sensitivity to local
ways of doing business being important differentiators.
The opportunities are huge: As UBS and PricewaterhouseCoopers
noted in a recent report, 89 Chinese entrepreneurs became
billionaires for the first time in 2017. That is three times more
than the 30 who were minted in the US during the same year, or
the 34 created in Europe, the Middle East and North Africa.
China’s market is also young: Some 17 per cent of new Chinese
billionaires founded businesses less than 10 years ago; in the
US, the comparable share is 7 per cent. To put the figures into a
global context, 199 self-made billionaires were created in
2017.
Across China, personal wealth is around $21 trillion for 2017,
according to Boston Consulting Group. Other measures, such as
those provided in the annual Capgemini World Wealth
Report, show rapid wealth growth in the region, with China
in the driving seat.
(Editor's comment: The report and the comments make sense to a certain degree. If you are a local bank, with an established brand, and maybe have worked with HNW clients during their ascent up the business ladder, you are going to be in a good place to take them into the wealth management side of the business. That said, people in Asia are still, as far as this publication can tell, keen on the big-brand banks in some ways, not least because of their perceived ability to get access into markets across the world, pull in global expertise, and share cross-border ideas. Given the pace of change, there is a big enough pie to go round. The issue could become more taxing if, or when, the domestic firms, such as ICBC and China Merchants Bank, decide to become more international. And firms such as Singapore's DBS, OCBC and UOB will not stand still, of course. With some European players such as Barclays and Societe Generale selling local Asian private banks in recent years, it is clear that this vast market is changing, and there's all to play for.)